Reporting Beneficial Ownership Through a Corporate Entity
Understanding who needs to be reported as a beneficial owner can be complex when your company is owned by another corporation. Here’s a simple guide to help you navigate this process:
What Is a Beneficial Owner?
A beneficial owner is any individual who:
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Exercises substantial control over the company, or
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Owns or controls at least 25% of the company’s ownership interests.
What If My Company Is Owned by Another Corporation?
If your company (let’s call it Company A) is owned by another corporation (Company B), you generally need to report the individuals who:
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Directly or indirectly control Company A through their involvement in Company B.
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Own or control at least 25% of Company A through their ownership in Company B.
Example 1:
If Company B owns 100% of Company A, and an individual owns 50% of Company B, that individual indirectly owns 50% of Company A (100% of Company A × 50% ownership in Company B). Therefore, they would be reported as a beneficial owner of Company A.
Special Reporting Rule: Ownership Through Exempt Entities
There’s a special rule if Company B is an exempt entity, such as a large operating company that does not need to report its beneficial owners.
If Company B is exempt:
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You do not need to report the individual beneficial owners of Company B.
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Instead, you only need to report the name of Company B as the exempt entity.
Example 2:
Suppose Company B, which owns 50% of Company A, is a large operating company (and thus exempt). If an individual owns 50% of Company B, they indirectly own 25% of Company A (50% of Company B × 50% of Company A). Since Company B is exempt, you only report Company B’s name, not the individual’s details.
Still Need Help?
If you’re unsure whether the owning corporation is exempt or need assistance with identifying beneficial owners, contact one of our experts for personalized help.